When Vancouver-based Brett Resources Inc. optioned the Hammond Reef project from Kinross Gold in 2006, the property had an historic inferred resource of 1.8 million ounces of gold. By November 2009, a scoping study done by Scott Wilson RPA for the Atikokan property in northwestern Ontario calculated an inferred resource of 6.7 million ounces of gold or 259 million tonnes at a grade of 0.8 grams per tonne using a 0.3 gram per tonne cut off.
The study showed that at a gold price of $825 per ounce and a milling rate of 50,000 tonnes per day, an open pit at Hammond Reef would produce an average of 369,000 ounces of gold per year over a mine life of 14 years.
The March 2006 option agreement with Kinross gave Brett Resources an opportunity to earn a 60 per cent interest in the property in return for spending US $5 million over a five-year period.
Next stage
"We started exploration in October 2006 and, by November 2007, we had already spent the $5 million," said Brett Resources president and CEO Patrick Soares. "We wanted to take the project to the next stage, so we negotiated the purchase of the remaining 40 per cent interest from Kinross for 14 million shares and a two per cent net smelter royalty."
At around the same time, the junior miner published a resource of 4.8 million ounces at a grade of 1.05 g/t, "but the market didn't particularly care because it was the height of the financial crisis and everybody was hunkering down," said Soares.
Fortunately, Brett Resources had just raised $9 million and had sufficient funds in its treasury to continue working on the project through 2008 and the first half of 2009. A revised resource of 5.2 million ounces was published in July 2009 as gold prices began to soar. "That's when the market started to pay attention," said Soares.
"We were coming out of the financial crisis and gold was appealing because people were trying to hedge their bets against the decline of the U.S. dollar."
Since then, the company has raised another $44 million and has continued to aggressively work the project. Three diamond drills are now turning on the property and Soares plans to bring in two more drills this spring.
The deposit has several positive attributes, including its location 23 kilometres northeast of Atikokan, a former iron-mining town 150 kilometres northwest of Thunder Bay. The property can be accessed by both water and road and there is a power line approximately 10 kilometres away.
With 97 per cent of the flat-lying deposit less than 300 metres from surface, Hammond Reef will also be easy and economical to mine.
"We have signed MOUs with eight First Nations in the area and we're working with First Nation contractors to supply drilling services and build a new road to the site," said Soares.
Drill program
Going forward, Brett Resources plans to conclude a 70,000-metre drill program by November. The company has also started work on a baseline environmental study and has plans to begin working on environmental impact and socio-economic impact statements.
"Ultimately, we'll need to take the inferred resource and move most of it into the measured and indicated category, so that when we go to a feasibility study, we can turn it into a reserve," said Soares.
With the Snip, Eskay Creek, and Brewery Creek gold mines to his credit, Brett Resources' chairman Ron Netolitzky has an impressive track record as a successful mine finder and developer. Also on Netolitzky's resumé is the Bill Dennis Prospector of the Year Award, presented by the Prospectors and Developers Association of Canada in 1990.
Soares, a professional geologist, spent more than 15 years working in gold and base metal mines for a variety of mining companies,
including Sutton Resources Ltd. (acquired by Barrick Gold in 1999), EuroZinc Mining Corp. (now part of Lundin Mining Corporation), Aurizon Mines Ltd. and, most recently, Tournigan Gold Corporation.
It's too early to tell if Brett Resources will bring the property into production itself or strike a deal with a major mining company.
"As a junior mining company, you always have to be prepared to go all the way and put your property into production, but Hammond Reef is a robust enough project that, at some point, a major may be interested in taking it over," said Soares.
"We already have confidentiality agreements with several companies to look at our data and, so far, they appear to like what they see."
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